CPI Lower Than Forecast

INDIA: Indian bonds may be supported after data late yesterday showed CPI grew at a slower-than-estimated pace. CPI rose at 6.26% Y/Y in June, below estimates of 6.59%, however this is still above the top end of the RBI's target band. Other data showed industrial production rose 29.3% in May, below estimates of 32%. As a reminder, RBI Governor Das said last week that recent higher inflation was 'transitory' and an early exit from pandemic stimulus may hurt the recovery.

• Commerzbank remains positive on the recovery in India: "It seems like businesses are also learning to cope with the pandemic. There are continued signs of improvement on the Covid front. The 7-day average of new cases fell to 44k yesterday from a peak of nearly 400k in May. The economy is expected to contract on a quarter-on-quarter basis in Q2 but should expand for the rest of the year. This bodes well for INR's outlook and we look for stabilization near term between the 74-75 range"